Koninklijke Philips Electronics NV (PHG) Stock Continues to Grow Stronger

Philips also holds strong financial performance when compared to its competitor,s i.e. Panasonic Corporation (NYSE:PC) and Sony Corporation (NYSE:SNE). For the fourth quarter of 2012, Panasonic reported a net profit margin of 2.89%; however, for 2012 the net profit margin was -10.48%. On the other hand, the net profit margin of Philips for 2012 was 1.92%, while for the fourth quarter in 2012 it was -2.19%. The net profit margin of Sony for 2012 was -6.14%. Therefore, it can be inferred that Philips has maintained a better net profit margin for the year 2012 compared to Panasonic and Sony. Philips has maintained an EPS of 0.58, which is higher than the EPS of Panasonic and Sony that stand at -7.26 and -5.75, respectively. This also indicates that both Panasonic and Sony have incurred much larger losses when compared with Philips.

Sale of Business Segment

Philips also announced that it has agreed to sell its ‘Lifestyle Entertainment’ segment to Funai Electric Company for around $201.5 million. Along with this consideration, Philips will also receive a brand license fee covering 5.5 years. The company also announced that it will not transfer its video business until 2017 due to “existing intellectual property licensing arrangement.”

After the analysis of multiple factors influencing the market performance of Philips, in my opinion investors should buy the shares in the company. The rationalization behind this recommendation is that the company has a strong financial performance, and there are sufficient expectations regarding profits in the prospective financial periods. The company also enjoys positive ratings by multiple analysts and investor confidence. All these factors will continue to have a positive influence on the shares of the company and the share price will continue to surge. Short term investors can benefit from the situation as the incline in share price will maximize the opportunity for capital gains.

The article This Electronic Stock Continues to Grow Stronger originally appeared on Fool.com and is written by Muhammad Bazil.

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